Can Uncle Sam Cut Gas Costs?

May 23, 2007 — -- Nearly two dozen governors asked Congress to hold hearings and investigate the recent surge in gasoline prices. The Connecticut congressional delegation requested the Government Accountability Office (GAO) to investigate. Congress held hearings and legislators proposed price gouging legislation. The House voted to give the government permission to sue OPEC over its production quotas, arguing that the cartel uses them to set the price of oil.

But with gas prices at record highs, is there anything that the government can do to help lower the cost of gasoline?

The ABC News Business Unit spoke with several energy economists and analysts and asked them to comment on proposals often mentioned.

What if the government were to standardize the types of gasoline refined in the United States?

Michelle Foss, chief energy economist at the bureau of Economic Geology at the University of Texas in Austin, said this could lower prices. "If everyone had the same rules in place, it would lower the cost of correcting imbalances and make it easier for suppliers to adjust because demand is not the same in all parts of U.S."

"It would help," agreed Severin Borenstein, director of the University of California Energy, "but it would not fundamentally change it. It would reduce localized extreme priced spikes. But overall increases nationally would not be changed." He added that if the nation decided to go for lower standards and allow for dirtier gasoline, then prices might drop further.

Jerry Taylor, a senior fellow who studies energy policy at the CATO Institute, also said this could lower prices, but added, "Multiplicity of blends is not the reason why we've got high gasoline prices today. It is a very modest factor in terms of price." He also said that certain states and cities have specialized fuels for specific reasons, such as improving air quality.

If oil companies could drill for oil in the Arctic National Wildlife Refuge or in more places offshore, would that lower prices?